Author | Diana PardoOver the last decade, markets and investors have focused on startups, newly established tech companies. Financed with venture capital, they pursue very specific products and services to meet a requirement that has not yet been covered. However, in reality, their explosive growth entails significant risks. Few startups survive beyond a few months or years, leaving behind a trail of debt and unemployment after the initial bonanza.
What is the cause of the premature death of startups?There are normally two reasons:
- The focus is placed solely on the product development phase. As soon as this is over, they are not prepared to step up to the next level and, therefore, they disappear.
- Many startups emerge without having a sustainable business model in place therefore, they are sold to larger companies with the hope of being developed at a later stage. Very often, the search for the “exit” stage is more important than sustainability.